By: Anirban Basu Sage Policy Group, Inc. September 13, 2012

1. The Dog Ate My Home On Behalf of Greater Susquehanna Valley Chamber of Commerce By: AnirbanBasu Sage Policy Group, Inc. September 13, 2012

2. Penny wise,Euro foolish

3. Historic and Projected World Output Growth 2004 through 2013* Source: International Monetary Fund *2012-2013 data are projections

4. Global Recession Watchas of August 2012 Source: Moody’s Economy.com

5. Debt by Country2011 Source: IMF; BIS; Bloomberg L.P.

6. Top 12 Stock Exchanges 2011 Growth Source: Yahoo! Finance

7. Top 12 Stock Exchanges Year-to-date Growth through 9/7 Source: Yahoo! Finance

8. All dressed up with no place to go

9. Industrial ProductionFebruary 2001 through July 2012 Source: Federal Reserve The industrial production index measures the real output of the manufacturing, mining, and electric and gas utilities industries.

10. Gross Domestic Product1990Q1 through 2012Q2 Source: Bureau of Economic Analysis

11. Net Change in U.S. Jobs, BLSJanuary 2002 through August 2012 Aug. 2012: +96K Between Aug. 2011 and Aug. 2012, the nation gained 1,808,000 jobs. Source: Bureau of Labor Statistics

12. National Nonfarm Employmentby Industry SectorAugust 2012 v. August 2011 All told 1,808K Jobs gained Source: Bureau of Labor Statistics

13. Issues with the Federal Budget • The automatic sequestration mandated by the Budget Control Act of 2011 is set to begin in January 2013. Both defense and non-defense programs will be cut by $54.7 billion each year from 2013 through 2021 – a total of approximately $109.3 billion per year or $984 billion through 2021. • In addition, if Congress does not act by the end of the year, nearly 50 items in the tax code will expire. Among the most significant items are the “Bush tax cuts” and the payroll tax cut. • Bush Tax Cuts: If tax cuts are not extended, approximately 60 percent of taxpayers will see an increase in their tax ratebetween 3 and 5 percentage points (e.g. a couple that makes $90,000/year will pay an extra $2,700 in federal income taxes). Expiring tax cuts also mean reductions to investment income. If the current rates expire, the tax rate for capital gains would increase from 15 percent to 20 percent and dividendswould be taxed as normal income, instead of at the current 15 percent rate. • Payroll Tax Cut: If allowed to expire, roughly 160 million workers will see a 2 percentage point tax increase in payroll taxes, or an average of $714 or more/year for each worker. The Joint Committee on Taxation reports that the payroll tax cut will save workers $114 billion in 2012.

14. Pennsylvania Nonfarm Employmentby Industry Sector Groups (SA)July 2011 v. July 2012Absolute Change PA Total: +20K; +0.4% US Total: +1,797K; +1.4% Source: Bureau of Labor Statistics

15. Philadelphia-Camden-Wilmington Nonfarm Employmentby Industry Sector Groups (NSA)July 2011 v. July 2012Absolute Change Philly MSA Total: +13.2K; +0.5% PA Total (SA): +20K; +0.4% US Total (SA): +1,797K; + 1.4% Source: Bureau of Labor Statistics

16. Harrisburg-Carlisle Nonfarm Employmentby Industry Sector Groups (NSA)July 2011 v. July 2012Absolute Change Harrisburg MSA Total: -2.2K; -0.7% PA Total (SA): +20K; +0.4% US Total (SA): +1,797K; + 1.4% Source: Bureau of Labor Statistics

17. Scranton-Wilkes-Barre MSA Nonfarm Employmentby Industry Sector Groups (NSA)July 2011 v. July 2012Absolute Change Scranton-Wilkes-Barre Total: +2.3K; +0.9% PA Total (SA): +20K; +0.4% US Total (SA): +1,797K; + 1.4% Source: Bureau of Labor Statistics

18. Employment Growth, U.S. States (SA) July 2012 v. July 2011 Percent Change Source: Bureau of Labor Statistics U.S. Year-over-year Percent Change: 1.4%

19. Unemployment Rates, U.S. States (SA) July 2012 Source: Bureau of Labor Statistics U.S. Unemployment Rate: 8.3%

20. Unemployment Rates, Selected Large Metros (NSA)July 2012 Source: Bureau of Labor Statistics

21. Unemployment Rates, Pennsylvania MSA’s (NSA)July 2012 Source: Bureau of Labor Statistics

22. Sunbury Micropolitan Area Labor ForceJanuary 2001 through July 2012 Source: Bureau of Labor Statistics

23. Sunbury Micropolitan Area Unemployment RatesJanuary 2001 through July 2012 Source: Bureau of Labor Statistics

24. Sunbury Micropolitan Area Employment GrowthJanuary 2001 through July 2012 Source: Bureau of Labor Statistics

25. It could be worse, right??

26. 15-Year & 30-Year Fixed Mortgage Rates January 1995 through September 2012* Source: Freddie Mac *Average rate through 9/6.

27. U.S. New Home SalesJanuary 1999 through July 2012 Source: Economy.com, Census Bureau

28. U.S. Housing StartsFebruary 1999 through July 2012 Source: Census Bureau

29. A penny saved is a penny earned

30. Conference Board Consumer Confidence2005 – August 2012 Source: Conference Board

31. U.S. Retail and Food Service SalesJanuary 2002 through July 2012 Source: Census Bureau

32. U.S. Chain Store Sales Growth by Type of Store August 2011 v. August 2012 Source: Economy.com

33. National Vehicle Sales June 2004 through August 2012 (SAAR) Source: Autodata Corp.

34. U.S. Personal Savings RateJanuary 2002 through July 2012 Source: Bureau of Economic Analysis

35. Conference Board Leading Economic Indicators IndexAugust 2007 through July 2012 Source: Conference Board

36. It’s difficult to forecast, particularly the future • Economy hit a soft patch; • Recession not imminent; • Black swan threats: (1) Iran (2) Israel/Iran (3) Europe; • 2013 could be very different depending on…; • Many headwinds remain and the nascent recovery could easily falter; and • Geographic patterns of economic growth in Pennsylvania have shifted.

37. Thank You • You can always reach me at abasu@sagepolicy.com • Please look for updates of information at www.sagepolicy.com. • Also, if you need us in a hurry, we are at 410.522.7243 (410.522.SAGE) • Please contact us when you require economic research & policy analysis.